The Federal government is close to enacting a law to greatly limit the use of credit reporting when conducting background checks. I would recommend that you read an article published on the SHRM (Society for Human Resource Management) website to understand the issues in more detail. The story has provided me with a good opportunity to discuss background checks in general.
Conducting and making decisions based on the findings of background checks can be a slippery slope.
So, how does a job candidate fail a background check? If you’re wondering, you’re not alone. It’s a common question and there are a number of answers. Below is a breakdown of the ways a job candidate can fail.
Candidate has a bad credit history
Not all background checks include a credit check and this pending legislation I mentioned earlier may very well greatly diminish this practice. Employers that currently do consider credit checks usually consider a poor credit rating to be a mark against a job candidate, especially if the candidate is applying for a financial position.
That said, many employers should understand that a person’s financial history can be affected by things such as a long period of unemployment, a death in the family, divorce, or mistakes made when an applicant was younger. So unless the candidate is applying for a job that handles money, an employer should not deny the candidate the job even if they fail this portion of the background check.
For what it’s worth, my suggestion is that, for most jobs, don’t consider running a credit report at all. If you are concerned about hiring a person who may be a risk, consider running a civil check, which can be run at both the Federal and state county level. A civil court check at the state county level will show things such as small claims and minor disputes, liens and foreclosures, breach of contracts, and restraining orders.
At the Federal level, a civil court check will show things such as violations of federal regulations, civil rights and interstate commerce, along with tax disputes and bankruptcies.
Embellished experience and credentials
We all lose track of dates here and there, and many job candidates tweak resumes to include keywords that aren’t totally the truth. But there’s a difference between getting a start or end date from a previous employer slightly wrong as opposed to claiming to have graduated from a university that doesn’t know your name. Mismatched credentials at best look bad and at worst can lead to accusations of fraud.
Candidate was convicted of a crime relevant to the job’s responsibilities
Employers have a legal obligation to keep their workplace safe, but they also can’t discriminate based on an applicant’s criminal record. In fact, you can’t deny a job candidate unless the offense is relevant to the job’s core responsibilities.
For example, sexual offenders can’t become teachers or school bus drivers. Any job that deals with these “vulnerable populations” (e.g. youth and the elderly) will need to be held by employees who never committed a sexual offense.
Candidate committed a crime and is applying for a high security clearance job
Jobs that require a high security clearance understandably hold their applicants to a very high standard. This means that a job candidate may be disqualified for something from their past before they even get to the security clearance check phase of the hiring process.
A candidate may be disqualified from a high security clearance job if their record contains any of the following: a single serious crime, a series of lesser offenses, embezzlement, income tax evasion (or other financial crimes), sexual offenses, crimes related to excessive alcohol or drug consumption, a history of personality disorders, or a history of cybercrime (such as hacking).
Visit the State Department website for more information on what may disqualify a job candidate.
Candidate has a dishonorable military discharge on their record
The full details of a discharge might not even be included in a background check report, but an employer may consider this a red flag and deny a candidate the job anyway. Employers for any job may choose not to hire a candidate because of a dishonorable discharge, but this will be more common for jobs related to security or finance, since those jobs typically require a spotless record.
The need for open dialogue and consistency
Understand that as an employer, you will deal with issues of embellishment and inaccuracies constantly.
Should any “red flags” come up on a background check, discuss the issues with the applicant to see if there is a credible explanation which will not rule the candidate out from further consideration.
Know in advance what your “tolerance level” is for these background check issues, as not applying a consistent practice could lead to a claim of discrimination.